ed Stagnating Korea Inc.

Are alarm bells ringing loudly for Korean businesses following the ferry disaster?

Two reports released by the central bank earlier this week may offer an answer to that question.

In its report on corporate management based on a survey of 1,710 companies, the Bank of Korea said combined sales of these companies grew a meager 0.7 percent last year from 2012, the lowest gain since the 0.1 percent decline in 2009. This figure represents a sharp slowdown from the 4.9 percent year-on-year increase in 2012.

Their average ratio of operating profit to sales came in at 4.6 percent last year, compared with 4.8 percent in 2012. The figure was also the lowest since 2003 when the central bank began to compile related data. The corresponding ratio is all the more dismal, if Samsung Electronics and Hyundai Motor, the nation’s two flagship companies, are excluded from the statistics.

A separate report on financial stability, based on a survey of nearly 20,000 companies, shows that marginal companies ― which are unable to cover financial costs for three years in a row ― numbered 2,965 in 2012, a whopping 47-percent gain from 2,019 firms in 2009. Of the 2012 figure, 537 were large companies and one-third of them were real estate and construction companies.

Companies’ quarterly results also remained in the doldrums. The 45 leading companies that unveiled their first-quarter results until last week saw their combined operating profit fall 5 percent from a year ago. Only a few flagship firms, including Samsung Electronics and SK hynix, performed well, whereas shipbuilding, oil refining and financial firms performed poorly.

It’s little surprise that the fast growth of Korea Inc. is grinding to a halt, given that credit rating agencies have been in a rush to lower the ratings of Korean companies in recent months.

All these must be a wake-up call to Korean enterprises, particularly taking into account that the rise in the number of marginal firms will result in weakening facility investments and employment and curbing wage increases.

Japanese companies are a strong case in point.

In 1989, 14 of the 20 biggest companies in the world ranked by market value were based in Japan, including Industrial Bank of Japan and Toyota Motor, but not a single Japanese company is ranked among the 2014 top 20, according to CNBC. With American companies mostly making up the list, Samsung Electronics is the only Asian company in the rankings.

This is why Korean companies should spare no effort to pursue technical innovation under strong entrepreneurship.